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39m ago

Think Tanks Push Reeves Toward Tax Rises With 2p NI‑to‑Income Tax Switch

Analysts warn of a multibillion shortfall that requires a credible signal to markets.

Rachel Reeves is under pressure to raise taxes Jordan Pettitt Provider: via REUTERS Source: Pool
Rachel Reeves will deliver her Budget in November (Jordan Pettitt/Pool via REUTERS)
Rachel Reeves should undertake serious tax reforms, says the Institute for Government

Overview

  • The Resolution Foundation proposes cutting employee national insurance by 2p and raising income tax rates by 2p, estimating about £6bn a year in extra revenue as pensioners, landlords and the self‑employed pay income tax but not employee NI.
  • The think tank outlines a wider package of up to roughly £30bn, including higher dividend taxes, extending employer NI to some partnerships, tackling unpaid small‑business corporation tax, lowering the VAT threshold over time to £30,000, carbon charges on long‑haul travel and shipping, expanded sugar and salt levies, and vehicle excise duty reform.
  • The Institute for Government urges the chancellor to abandon Labour’s pledge not to raise the main tax rates, calling the approach unrealistic and warning against piecemeal measures ahead of the 26 November Budget.
  • Ministers restate the promise not to increase the rates of income tax, national insurance or VAT on working people’s pay, while the Treasury says tax decisions will be made at fiscal events.
  • Estimates of the budget gap vary from about £20bn to as much as £51bn, with the Resolution Foundation saying decisive action would reassure bond investors about the UK’s public finances.